Fortune Brands has agreed to sell its golf business, which includes Titleist and FootJoy, to a group led by the owner of the Fila sports brand for $1.23 billion in cash, according to Reuters. The sale is the first big play toward the planned breakup of Fortune to become solely an alcoholic drinks company. The group of South Korean buyers is led by Fila Korea and Mirae Asset Private Equity, the largest private equity firm in South Korea.
Fortune expects net proceeds of $1.1 billion from the sale, which is on track for completion in the fourth quarter.
Also worth a note, Wally Uihlein will remain the CEO of Acushnet.
More details of the deal via Reuters:
“We think the valuation of the business is fair, with the total purchase price implying about 1 times our 2011 estimated sales and just below 10.5 times our 2011 estimated EBITDA,” Jefferies analyst Douglas Lane said in a note.
Fila Korea saw off interest from private equity fund Blackstone Group , among others, for Acushnet which is Fortune’s smallest business and accounts for less than a fifth of its revenue.
The golf business will be a good fit with Fila given its portfolio in athletic footwear and apparel, analyst Lane said, adding that the “Korean consortium will be valuable to Acushnet’s strong Asia business, which continues to grow above domestic trends.”
Nearly half of the golf unit’s 2010 sales of $1.24 billion came in markets outside the United States. The unit had an operating income of about $80.2 million last year.
Reader Scott writes, “Suppose that Fila Korea is banking on some explosive growth in China, and that’s what made Titleist et al. worth more than the original estimates to them?” That’s a safe assumption. Finance experts, speak up!
(AP Photo/Mark Lennihan)
Good news for golf media – especially as compared to the rumored buyout by Callaway.
Below 10.5 EBITDA is crazy. Either Acushnet is either poorly managed or the economy is far from recovering. I would have think they would have sold at around 12X EBITDA. Huge steal for Fila Korea. I would have like to see Nike purchase Acushnet so Tiger could play with some real clubs.
Steph is that a picture of a “DT Solo”? I would think a well conected blogger like yourself would at least hit-up Titleist for some Pro V’s.
Getting Titleist, the most iconic brand in golf, for a mere $1.23B seems like a bargain to me.
I’m also glad that Callaway’s group did not get this.
I´m pretty sure getting the picture rights for a Pro V1 is probably a lot more expensive (overpriced *cough*) than a DT Solo pic…
I would have thought the level of profit against the level of turnover was rather poor. Only saving grace is the level of R&D costs and how their product level has improved which should result in greater turnover (on the basis that Fila/Mirae don’t screw it up) – they must be killing it in both 910 drivers and Pro V’s now…
[...] Fila purchased Acushnet (Titelist and FootJoy) for $1.23 billion (Wei Under Par) [...]